Form 11-K - short plan year

[wmyer]

Is an accountant's opinion required for an ESOP that must file Form 11-K and is not getting its financial statements audited for 5500 purposes because it has a short plan year of seven or fewer months? It's the initial plan year.

[Kirk Maldonado]

wmyer:

The Form 11-K is required by federal securities laws. The fact that ERISA provides some relief from the Form 5500 filing requirements in some situations is irrelevant.

[wmyer]

Thanks for the reply. The instructions for form 11-K say that the plan financial statements must be examined by an independent qualified public accountant to the extent required by ERISA (except that the "limited scope" exemption is not available) - page 2, bullet #4. I'm taking this to mean that since ERISA generally doesn't require the audit report for a short plan year of 7 or fewer months, no accountant's opinion is required for the 11-K. Is this a correct assumption?

[Kirk Maldonado]

My guess is that the drafter of the rules never contemplated your situation. If you guess wrong on this issue, that could mean that you will be treated as having sold unregistered securities. Given the enactment of Sarbanes-Oxley Act, I think the employer needs to retain competent counsel that understands both ERISA and federal securities laws to advise them on this issue.